Home > Educational Leadership, Higher Education > Discounting the Bottom Line

Discounting the Bottom Line

By Kevin Kiley

Private colleges and universities discounted tuition at unprecedented levels during the recession in a way that slowed down or reversed the growth in net revenue from tuition, according to a new report from the National Association of College and University Business Officers.

The discount that surveyed colleges and universities offered for full-time, first-year students through grants and other forms of need-based and merit aid hit an all-time high of 42.4 percent in 2010, a jump from about 39 percent in 2007. The report estimates that 88 percent of students at the institutions surveyed received some institutional aid, and those students paid about half of the college or university’s sticker price.

That increase in the discount rate came at the expense of growth in net tuition revenue. While net revenues grew at about 5 percent for five of the years between 2001 and 2007, tuition revenue dropped 0.3 percent in 2008, and grew only 1.8 percent and 2.8 percent in 2009 and 2010, respectively. That means that institutions did not gain nearly as much revenue as their tuition increases would suggest, and that many institutions saw gains in tuition revenue that lagged the inflation rate.

Continued at: http://www.insidehighered.com/news/2011/05/23/nacubo_survey_finds_increased_tuition_discounting_led_
to_financial_problems_during_the_recession

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